Member Article

The regulation on the national payment gateway has finally been issued. Bank Indonesia (“BI”), through its regulation No. 19/8/PBI/2017 (“PBI 19/8”) aims to establish national payment system interoperability by implementing switching interconnectivity.

The following is a general overview of PBI 19/8.

The National Payment Gateway: an Introduction

The National Payment Gateway or NPG means a system which consists of standards, switching, and services developed through a set of regulations and mechanisms (arrangements) which integrate a variety of payment instruments and channels nationally. Through the NPG, BI expects every payment instrument (eg ATM/Debit Cards, Credit Cards, e-money) to be usable in every payment channel (eg EDC at POS) not owned by the relevant issuers of the payment instruments – known as “interoperability”. This can be achieved through connecting switching networks among the switching companies – known as “switching interconnectivity”.

Under PBI 19/8, the NPG applies to all domestic transactions, ie transactions (i) using payment instruments issued in Indonesia; and (ii) entered into in Indonesia. Every domestic transaction must be processed through the NPG, as follows:

a. ATM/debit cards will be subject to the BI regulations on payment instruments
using cards (BI Regulation No. 11/11/PBI/2009 – as amended –
and its implementing regulations); and

b. payment instruments other than ATM/debit cards will be subject to a
Regulation of the Members of the Governing Council of BI to be issued
later.

Parties Involved in the NPG

The parties involved in the NPG are (i) the operators of the NPG; and (ii) parties connected to the NPG.

The Operators of the NPG

The operators of the NPG consist of (a) the Standards Institution; (b) Switching Institutions; and (c) Services Institutions.

a. Standards Institution

The principal function of the Standards Institution is to create, develop and manage standardized technical and operational specifications (“Standards”) for the interconnectivity and interoperability of the payment instruments and channels, as well as for switching and security. To do this, the Standards Institution will, among other things, manage and implement the certification of conformity to the Standards, act as the certificating authority, etc. The Standards will be owned by BI.

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